International Trade Committee on March 8th, 2011

[Brian Lee Crowley]

Just very quickly, Mr. Chairman, I've heard all the comments about the inadequacies of the arbitration process. I can understand and agree with many of the reservations we have about it.

The point is that there are only two alternatives if we're unhappy with the arbitration process. Either we go back to a situation where we rely on a contest of wills between Canada and the United States, not governed by rules, which was the state of affairs before the free trade agreement and which was much worse than the current status quo, or we move to an improved arbitration process, or indeed, towards the creation of a new set of judicial institutions that govern the emerging set of institutions that are binding the three countries of North America together. I think that's the better solution.

I think the fact that we are unhappy with the arbitration system is not an argument for getting rid of the rules-based system we have in place for relations between our three countries.

[The Chair, Conservative, Lee Richardson]

Thank you.

We'll go to Mr. Cannan.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Thank you, Mr. Chair.

I just have a quick question. I'll share my time with Mr. Trost.

I just wanted to clarify, first of all, for the witnesses, the comment about water. It's been articulated many times in this committee that it's our government's long-standing position that water in its natural state is not considered a good. It's not a good or a product and therefore remains outside the scope of the trade agreements. We've heard, several times, members from the Council of Canadians bring up the issue of water.

I want to be perfectly clear. It's a specific issue and is my concern as a Canadian as well. The bulk removal of boundary waters from the basins, for any reason, including export, is prohibited, and the provinces have measures in place to protect waters in their jurisdictions. I just wanted to clarify that on the record.

The other question, specifically for Mr. Crowley, is with regard to chapter 11.

Are you stating, then, that it's imperative that we have this chapter 11 in place and that it's working as it was established to do?

[Brian Lee Crowley]

Thank you.

I think it is imperative that we have a rules-based approach to trade with the United States that's embodied in the free trade agreement. If you're going to have rules that govern the relationship between Canada and the United States, you must have someone entitled to interpret the rules. This is indispensable.

Is the current arbitration system up to the job? It's a lot better, as I said a moment ago, than one alternative, which is no agreed upon system, so the more powerful party always wins. I think that some very good points have been raised about the adequacy of the arbitration system.

As part of the set of negotiations recently announced by Prime Minister Harper and President Obama extending the logic of the institutions we have already developed to border management and so on, I think we should be seeking an improved arbitration process in which we might have more confidence in the independence of the arbitrator. I think the lack of independence of the arbitrator has been somewhat overstated here, but I think there's always room for improvement.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Thank you.

I agree that a rules-based approach and having a fair, level business field and some predictability are important.

Go ahead, Mr. Trost.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Thank you, Ron.

My question is to Mr. Crowley.

One of the other witnesses stated that when it comes to arbitration panels and dealing with the United States, the States tend to have the advantage. But when it comes to dealing with Mexico and Canada, investors tend to have the advantage. I'm not sure if investors perceive it that way.

But if investors would perceive it that way, what country would then have the greater economic advantage for attracting investors? Would it be Canada and Mexico, with the more investor-friendly perspective, or would it be the United States? What would be the economic advantage of those perspectives?

[Brian Lee Crowley]

I guess I'm a little confused by what's being argued before the committee. It's pretty clear, to me at any rate, that the NAFTA agreement intends to protect investors against precisely the kind of action we saw by the Government of Newfoundland and Labrador.

One of the complaints that has been brought forward before the committee is that sometimes tribunals don't do that. Well, what's the consequence that should flow from that?

My view is that the consequence should be that we get better at enforcing the agreement. If the complaint is that the agreement is properly enforced in Canada but not in the United States, then by all means let us throw our weight into the negotiations for improved institutions within Canada and the United States to ensure that the agreement is properly enforced in the United States.

I don't understand how the fact that it's properly enforced in Canada and not in the United States is somehow an argument for us to change the rules in Canada. I don't get that.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Mr. Crowley, I'm not making that argument.

[Brian Lee Crowley]

I understand that. I wasn't suggesting that you were.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

I'm just asking whether this could give us an advantage in Canada.

[Brian Lee Crowley]

I spent some time in my remarks talking about why it's important to provide this kind of protection to investors because of the importance of upfront investments and long payback periods. We have to create certainty for investors so they can make that kind of investment.

Canada has been a destination for vast amounts of foreign investment. Anything that continues to assure investors they will receive fair and equitable treatment if they invest money in Canada, I think is a desirable thing.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Crowley, Mr. Van Harten, and Mr. Shrybman. I wish we could have gone another hour. I think it would have been useful for everyone. In any event, that is our time.

I have one housekeeping item. I'm going to excuse our witnesses and ask members to give me 30 seconds to consider the operational budget for the hearing we are having now. This is to cover the potential costs of witnesses. I doubt that we'll get anywhere near this number.

[An hon. member]

So moved.

[The Chair, Conservative, Lee Richardson]

It is moved by Mr. Silva and seconded by Mr. Trost that we pass the operational budget for the Standing Committee on International Trade's consideration of the AbitibiBowater settlement.

(Motion agreed to)

Thank you.

We will see you on Tuesday. I think we're back in room 306, but we'll give you notice tomorrow.

We're adjourned.